New federal rules meant to increase transparency around trusts and boost housing affordability are creating a lot of extra paperwork and headaches for many Canadians this tax season.
To start with, there’s the unused housing tax, or UHT, which imposes a yearly 1-per-cent levy on foreign-owned residential properties considered to be underused or vacant. My colleague Erica Alini has written that, while tax experts have long warned that, while Canadians don’t generally have to pay the tax, they may be required to file a UHT return – if only to claim an exemption – in certain cases.
The other tax issue concerns the reporting of trusts, notably bare trusts. A bare trust arrangement may exist where seniors add their children as joint owners for investment and banking accounts. To disclose a bare trust to CRA, you must file a T3 Trust Income Tax and Information Return and a related Schedule 15 form.
If you had to hire an accountant or lawyer – or both – to help you with Ottawa’s new tax-filing rules for trusts or the federal underused housing tax, please take this superquick survey:
Would you be open to being interviewed by Globe personal finance reporter Erica Alini about your experience? If so, please share your name, age and e-mail. Her e-mail is ealini@globeandmail.com
We’ll report back on the findings. As I said in a recent column, it’s outrageous to force people to pay for the services of an accountant or tax preparer to disclose routine family business to the CRA.
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Rob’s personal finance reading list
EVs vs hybrids
A U.S. personal finance take on the benefits of choosing a hybrid vehicle or an EV. Hybrids have a gas and electric engine, while EVs are pure electric vehicles. I’m leaning to a hybrid for our next vehicle.
Pet inflation really bites
The average annual cost of a dog in Canada jumped 23 per cent in three years to $3,020. One of the themes in this data is that small breeds are more budget friendly. Here’s what Globe reporters Chris Hannay and Erica Alini found when they looked into pet costs recently.
March break freebies
Stuff you can do with young kids on March break without spending money.
A how-to for surviving a layoff
A slowing economy means we’re going to see more employers laying off staff. Here are two sensible steps to take if you worry you might lose your job.
Ask Rob
Q: I recently switched my investments from high-fee mutual funds to Wealthsimple. My next decision is whether to go with self-directed or managed investing. The managed route put me through a simple Q&A that recommended a “balanced” approach with a 65-35 equity to fixed income ratio. However, customer service says the managed approach does not give specific investing advice or help. Managed investing has 0.5 per cent higher fees than self-directed. Would it be prudent to simply choose a self-balancing ETF such as the Vanguard Balanced ETF Portfolio (XBAL-T) to mimic the managed approach, with lower fees?
A: Managed investing means you would have a portfolio of exchange-traded funds assembled for you and maintained on an ongoing basis. When you contribute money to your account, it would be allocated in the right proportion to all the ETFs in your portfolio. When the portfolio needed rebalancing to bring the components back into the right mix, that would be done as well. All of these services are replicated in a low-cost asset allocation ETF, which you could buy at no cost through Wealthsimple’s self-directed trading platform. Asset allocation ETFs tend to offer mixes of 60 per cent stocks and 40 per cent bonds for balanced investors. For more aggressive investors, there are 80-20 and 100 per cent equity portfolios. I take a close look at asset allocation funds in this instalment of the Globe and Mail ETF Buyer’s Guide.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Tools, Explainers, Guides and Charts
Four signs of investment fraud, and a cybersecurity tool kit from the Canadian Bankers Association. March is fraud prevention month.
The Money-Free Zone
Gnarls Barkley absolutely crushes the song Reckoner, which could be my favourite Radiohead song.
On social media
A post on X that explains life insurance quite succinctly.
What I’ve been working on
- Which will outperform in the year ahead: Bonds, GICs or high interest savings accounts?
- Seniors and their families caught up in botched CRA attempt to crack down on tax evasion
- Online bank Tangerine cuts interest rate on its savings account, bucking the steady interest rate trend
More Rob Carrick and money coverage
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Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Why millennials and Gen Z are Alberta-bound for a more affordable life • Rising interest rates brought pain for new homeowners – and opportunity for house hunters • Why more Canadians are choosing to be child-free or delay parenthood • Love in the time of inflation: How to manage rising costs when dating • You're not bad at money – you're suffering from money shame • Retirement might look different for Gen Z and millennials. Here's how to plan for it • Recession-beating tips for the job market, housing, investing and the cost of life • Is the middle class dead for millennials and Gen Z?
- ✔️ The housing file: A house isn’t special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home down payment in Canada’s big cities • Property taxes are popping in some cities – how worried should you be about other tax hikes? • Our other real-estate problem – people have too much wealth tied up in houses • Borrowers and savers, here’s how to time the eventual rollback of interest rates
- 📈 Investing: Canada's top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer's guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
- 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle
Rob Carrick